Milk Supply Agreements (MSA) – Context and Comparison

Over the last few months, many dairy farmers have been asked, for the first time ever, to sign up to Milk Supply Agreements (MSA) committing them to supply milk to their co-op, and their co-op to purchase milk from them, with varying terms and conditions.

Many legitimately wonder “why do I need to do that now?”. This is a question every co-op putting forward an MSA must answer to every farmer, and it is crucial that farmers would understand what they involve in great detail.

In December 2011, IFA issued a policy paper titled “Recommendations on the relationship between active shareholders and co-ops in the context of the post 2015 dairy expansion” which highlighted the need for clarity between farmers and processors on supply volumes. In early 2013, IFA produced a further policy paper: “Guiding principles for Milk Supply Agreements”.

Since then, the National Dairy Committee has been involved in a co-op by co-op process of detailed briefing on and analysis of proposed MSAs, followed by feeding our recommendations to the co-ops concerned, in parallel to the normal democratic consultation process within the co-op itself.

IFA is in principle supportive of MSAs, provided they are developed after extensive consultation through the co-op democratic structure, they are fair and equitable, and very well understood by farmers.

The presentation below sets out the context for MSAs, and compares those currently in place or mooted under each of their main headings.

This is an update dated 5th February 2015 on an original document produced in July 2014. As MSAs are still evolving in some co-ops, we will continue to update this section from time to time.